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Bankrkuptcies, Profits, Subsidies, expectations.

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[quote user="schlimm"] After reading several articles,  it seems clear that AA is simply using  chapter 11 (as most of the other legacy airlines did earlier) to reduce labor costs and dump the pensions. They have a current cash reserve of ~$4 bil. [/quote] The cash account is only one line in the financial statements.  AMR filed for Chapter 11 protection because its financial position is unsustainable.   At the end of September 2011 the company had $24.7 billion in assets vs. $29.7 billion of liabilities, leaving it with a net negative equity position of $4.8 billion.  Equally concerning, to creditors and auditors, was the current ratio of .82.  A current ratio of less than 1 indicates that current liabilities exceed current assets, which can be an alarming sign in that the company cannot potentially pay its current bills. AMR has been losing money for nearly a decade, e.g. $1.5 billion in 2009, $471 million in 2010, and $884 million through the first three quarters of this year.  Numerous factors have contributed to this scenario and brought it to the point where the board felt the need for Chapter 11 relief.  Labor was a factor, but there are others, to be sure. Moving to Chapter 11 whilst the company has adequate cash reserves means that the key stakeholders, including labor, are likely to come out of it better off than if the airline is liquidated, i.e. Eastern, Pan Am, etc. One of American's first actions, according to the Dallas Morning News, which knows American as well as anyone, was to abrogate the leases on 24 parked airplanes. Labor will have to agree to more realistic wage scales, as well as productivity enhancements, if the airline is to survive.
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